Bear Hug for Gold?

http://www.minyanville.com/articles/gold-rally-GLD-market-etf-statistics/index/a/21496/from/yahoo

Lance Lewis Mar 06, 2009 2:50 pm

I’ve read some things written by gold bears of late, calling for gold to decline in March due to “seasonal tendencies."

As always with statistics, if one doesn’t know why a particular statistical pattern occurs (as with the “Super Bowl Indicator” for example), one can make incorrect assumptions about future behavior.

In gold’s case, it’s typical seasonality tends to see gold rally in the fall, and then peak in the early spring. But the reason that we typically see this pattern, is due to the seasonality of gold demand coming from the largest gold jewelry consumer on the planet, whose various festivals revolve around gold: India.

However, as I’ve pointed out before, jewelry demand is not what is currently driving the gold price. Indian gold imports in February were virtually 0. Meanwhile, gold rallied $100 during February to $1000 and an 11-month high. As always occurs during a big bull market in gold, investment demand is the primary driver of the gold market, and it displaces jewelry demand. And investment demand is obviously not seasonal.